House budget seeks to up feds’ retirement contributions

The House Republican budget plan for next year aims to curtail federal spending by more than $5.1 trillion over the next 10 years, in part by requiring federal employees to contribute more toward their pensions.

The budget blueprint unveiled by Rep. Paul Ryan (R-Wis.) Tuesday includes a handful of proposals affecting the federal workforce that Ryan and House Republicans have championed in the past. Rep. Paul Ryan (R-Wis.) (File photo) Among them, the recommendation that federal employees, including members of Congress, make “greater contributions toward their own retirement,” in keeping with the recommendations from the Simpson-Bowles deficit-reduction committee.

Newly hired federal employees are currently required to contribute 4.4 percent of their salary toward their pensions, under the bipartisan budget deal negotiated by Ryan and his Senate Democratic counterpart, Patty Murray (D-Wash.). Federal employees hired in 2013 are required to contribute 3.1 percent of their salaries toward their pensions, while federal workers on board prior to that contribute 0.8 percent toward their defined-benefit pensions. FERS employees also contribute to Social Security.

Ryan’s proposed 2015 budget would also eliminate the special supplemental payment for FERS employees who retire the age of 62 and aren’t eligible for Social Security payments yet.

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10% workforce cuts, elimination of student loan repayment

All told, these proposals would save about $125 billion over 10 years, according to Ryan’s projections and would also “help facilitate a transition to a defined contribution system for new federal employees that would give them more control over their own retirement security,” according to the budget.

The Ryan budget also includes savings by reducing the size of the federal workforce by 10 percent through attrition. The budget blueprint would limit agencies to hiring one employee for every three who leave government service.

The budget also seeks to phase out the option for federal agencies to repay their employees’ student loans. Several agencies, such as the departments of Defense, State and Justice offer to repay employees’ student loans in certain circumstances as a recruitment and retention incentive. Overall, in 2012, the last year for which data is available, 35 different agencies repaid a total of $70.3 million in loans for some 10,500 employees.

The Ryan budget for 2015 makes no mention of federal pay. Previous versions of the budget proposal contended federal employees were overpaid compared to their private-sector counterparts and called for extending the federal pay freeze, initially authorized for two years, to five years.

The White House budget, released last month, takes a different tack on federal-employee benefits. The White House, in its fiscal 2015 proposal, supports a slight 1 percent pay raise for federal employees for the second year in a row. The President’s budget also omitted proposals requiring federal employees to contribute more toward their retirements and to shrink retirees’ annual cost-of-living adjustments by switching to a new formula. Both of those were included in last year’s budget release but left out of the current one.